BANGALORE: It’s easy to plan a budget on a guaranteed income, but what if you were to lose your job? The immediate thought that comes to most people is that the situation wouldn’t be so bad- there are savings one can make use of. However, though savings are considered to be protection against emergencies, most savings are already allocated towards many other commitments.

If you’re saving to purchase an essential item, like a new house or car, a sudden job loss could cause your finances to spiral out of control. The economictimes.indiatimes.com has compiled a list of things you can do to manage your money during stressful times.

Have liquid assets

Assets can be either permanently locked or easily liquefiable. Examples of the former are things like real estate, unlisted stock and artworks. The latter groups include listed stocks, short term bonds and gold (in most countries). It is important that your portfolio doesn’t contain more than 50 percent of fixed assets stocks, as it greatly multiplies your difficulty during tough times.

Have flexible cash flows

There are three ways to divide your cash flow- fixed, regular and discretionary. Fixed cash flows are those expenses which are indispensable for survival, like rent, insurance premiums and school fees. Regular cash flows are the expenses that are necessary, but reducible like, utilities and groceries.

Discretionary flows are expenses that can be easily eliminated, like vacations and entertainment. Having a large proportion of your cash flow as fixed or regular makes emergency situations difficult to handle.

Plan a new budget

List all the debt you have, and plan a new budget based on the ones you need to pay, like rent, and the ones you can avoid paying for a while, like credit card bills. This is because landlords can take away your house on the spot, while credit card companies need to take you to court (and even then they can claim only the maximum amount you can afford to pay). However, this principle does not apply when you’re employed, as the less debt you have, the better.

Also Read: New Challengers For The Top Financial Centers In The World

Eight Elite Post Retirement Destinations Around The World